Out with the old

On reading the press coverage last week on the European Court of Justice (ECJ) judgment in the Heyday litigation the government's victory on compulsory retirement ages appears absolute; it is lawful to forcibly retire workers over the age of 65 by virtue of the Employment Equality (Age) Regulations. But the reality of the judgment was far more nuanced, and many extremely positive features of the judgment were lost in the furore.

There are two main issues for practitioners. Firstly, there is the question of whether the default retirement age provision (reg.30) can be justified according to a high standard of proof. Secondly, the judgment contains potentially wide-ranging ramifications for private employers who hope to justify direct age discrimination under reg.3.

Standard of proof

Regulation 30 of the 2006 Regulations provides that dismissals of employees at, or over, the age of 65 are lawful where the reason for the dismissal is retirement.

Article 6(1) of the Equality Directive 2000/78 ('the Directive') provides that differences of treatment on grounds of age shall not constitute discrimination if they are objectively and reasonably justified by a legitimate aim, examples of which are set out within the Article.

The court said that member states may provide, 'within the context of national law, for certain kinds of differences in treatment on grounds of age if they are 'objectively and reasonably' justified by a legitimate aim, such as employment policy, or labour market or vocational training objectives, and if the means of achieving that aim are appropriate and necessary'.

However, for the first time in the context of social policy aims within discrimination cases, the ECJ stated that Art.6 of the Directive 'imposes on member states the burden of establishing to a high standard of proof the legitimacy of the aim relied on as a justification'.

Age Concern made it clear in their submissions that they considered that in a case of a derogation which permits objective justification for what otherwise constitutes direct discrimination, there is a need for a very high standard of proof. The court accepted this. The case will now come back to the High Court, which will have to decide, in the light of the ECJ's ruling, whether the government can prove to this high standard that its stated policy aims require the default retirement age. Clearly a close scrutiny of the evidential basis for the government's aims will be required.

The government will now be forced to set out explicitly its reasoning for the default retirement age. It does so in the midst of an economic climate in which low savings rates, the pensions collapse and the employment downturn affect older people who are willing and able to stay in their jobs, and who may need to in order to provide for themselves and their families. The government continues to make public statements about the need for the workforce to work longer and later in life, so the legislation stands starkly against these goals. The High Court now will have to develop the detail of this high standard of proof in the context of this worsening economic climate.

There is little doubt that the battle over reg.30 has a long way to go. In the meantime, employers and employees suffer uncertainty. There are about 260 cases waiting for the outcome of this litigation, which will probably remain stayed pending the outcome of Heyday.

Private employers and the justification defence

The court emphasised that Art.6(1) only permits derogations from the principle of non-discrimination in respect of measures justified by legitimate social policy objectives. Regulation 3 of the Age Regulations permits justification of any act of direct discrimination if it constitutes a 'proportionate means of achieving a legitimate aim'.

Although the court did not accept the argument that there needed to be a specific list of criteria which could constitute legitimate aims in the regulations, the court stated that, absent such precision, legitimate aims must have a public interest nature. It said: 'By their public interest nature [the Art.6(1) social policy objective] legitimate aims are distinguishable from purely individual reasons particular to the employer's situation, such as cost reduction or improving competitiveness.' As such, purely private and individual reasons no longer suffice. Moreover, said the court, 'mere generalisations concerning the capacity of a specific measure to contribute to [social policies]' would not suffice, and would not constitute evidence on the basis of which it could reasonably be considered that the means chosen were suitable for achieving those aims.

In Seldon v Clarkson [2008] UKEAT/0063/08, one of the reasons advanced by a law firm for retiring a solicitor was to make way for junior associates. It is doubtful that this would constitute a legitimate objective now, although the point can be argued either way. The aim of ensuring collegiality in the partnership probably would not, as it plainly relates only to the situation of the private employer.

So what use is the reg.3 justification defence in the future? It is likely that the judgment narrows the scope for justifying direct age discrimination. The public interest aims and purpose behind treatment directly based on age will need to be set out carefully. Employers will have to demonstrate that their aims are similar to those stated legitimate aims set out in Art.6(1) '“ for example public safety.

The story is far from over yet.

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